12 Hr Ce.Chpt 1.Agency

Illinois Continuing Education : 

Illinois Continuing Education 12 Hr Continuing Education Program 1 Copyright REEC 2011 Chapter 1 Agency

Chapter 1 Agency: 

Chapter 1 Agency Legislative Intent - Page 6 Relationship Between Licenses and Consumers - Page 7 Duties of Licensees Representing Clients Page 8 Licensees Relationship to Customers - Page 8 Ministerial Activity- Page 9 Duties of Termination- Page 9 Agency Relationship Disclosure- Page 10 Compensation and Agency- Page 10 Dual Agency -Page 11 Practice Exams Exam and Answers Copyright REEC 2011 2

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Agents Duties Fiduciary duties : Care, Obedience ,Accountability ,Notice and Service In Illinois' we also include: Perform the terms of the Brokerage (employment) agreement with the client Promote the of the Client Exercise Reasonable Keep Confidential information Comply with al laws Including Fair Housing and License Law Act 2000 . Copyright REEC 2011 3 Page 26 BEST INTEREST Care AND skill confidential

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Agents Relationships Brokerage Agreements ( The more common Brokerage or “employments” a greements in real estate include, : Listing contracts, ( Seller “employs” a broker to sell a [property) Property Management Contracts ( landlord employs Broker) to manage and lease) Buyer Brokerage ( Broker employs a broker to help them buy) Tenant Rep (Tenant employs broker to represent tenant in leasing) ALL should be in writing and include among other items: Compensation Time Limit Designates Agent Fair Housing Language Dual Agency Language Minimum Service Statement . Copyright REEC 2011 4 Extra All Property Types and Classification

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Types of Agency Relationships In Illinois Three categories Consumer Not represented generally seeking information Customer A party that he agent does NOT represent Client The party that the agent does represent and owes statutory duties too Copyright REEC 2011 5 Page 26

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Agency Relationships Don’t necessarily always have to be in written. Conduct and also create an agency. All exclusive agreements must be in writing ( where the client is only hiring you) Assumption: T hey are your Client ) unless in writing and disclosure by both parties you are not. Copyright REEC 2011 6 Page 26 CLIENT ????

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Brokerage Agreements Agents Duties Continue After Confidential Info Must be kept Confidential Fulfill even after transaction- duties required under the brokerage agreement. Account for all monies and documents. Copyright REEC 2011 7 Page 26

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Sub Agency Definition: A sub agent is an agent of an agent ( i.e. Listing Broker asks other brokers to co op and help find a buyer, and will split the commission. Result: Cooperating broker(s) and all office agents become sub agents of Listing Broker AND his client Seller Before 2000 , as a member of an MLS (whether you knew it or not) you represented EVERY MLS seller ( That became an unintentional Dual Agency Hazard) After License Act 2000 While Sub agency is legal it does not arise as a result of brokers participating in an MLS. ( so in Illinois no unintentional Dual Agency with MLS Listings) Copyright REEC 2011 8 Page 26

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Designated Agency In 2000 when the Automatic offer of “Sub Agency ended “…Designated Agency came in Illinois) to replace it. Now in the employment agreement every party can have a “Designated Agent “ to represent them. Big Benefit ( a designated agent can each represent a “side” in a In-house deal. A designated agent for the seller and one for the buyer( so no dual agency) Copyright REEC 2011 9 Page 27

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Individual Relationships Unless Otherwise agreed to in writing you represent the Client you started working with. You need to have “Designated Agent s “ identified in the employment agreement. Broker needs to keep files on every transaction ( one for sellers one for buyers) the office has a deal with. Property Managers/Tenants ( make sure tenants know who you represent. Avoid dangerous DUAL AGENCY) Copyright REEC 2011 10 Page 27

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Dual Agency Dual Agency Disclosure and Consent ( while legal be very careful) Practice dual agency. Always have both clients a sign “Disclosure” statement ( usually found in brokerage agreements and then have them sign a “Consent “ statement,( usually in sales contract ) you will be acting as a dual agent. The exact language is dictated by Agency Law and must appear that way. If you refer a buyer client to another agent in your office to avoid dual agency ,you must give up representing that buyer in fact no Copyright REEC 2011 11 Page 27 SAFE Referral Fee

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Dual Agency Dual Agency is legal in Illinois but be very careful written notice needed if writing multiple offers from buyer clients on same property If a dual agent either client ( buyer or seller ) can still change their mind and request another agent to represent them . Copyright REEC 2011 12 Page 28

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Ministerial Acts Acts or duties you can do for “Customers” Informative or clerical Do not rise to “fiduciary “ duty levels Examples” Respond To Price or availability of property Set an appointment to view property Showing a FSBO Showing Personal home Public Open houses Showing a listing when seller ha refused dual Agency Copyright REEC 2011 13 Page 28

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Non Agency Disclosure Written Notice Must give notice to consumer you are representing and only providing ministerial acts. Notice of Non Agency is given upon first working with the consumer ( then they become your Customer) Copyright REEC 2011 14 Page 28 Not

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Minimum services All Illinois Licenses ( regardless of agency relationship) must offer a “Minimum level of service” Accept, deliver and present clients offers/counteroffers Assist in developing communicating negotiating and present offers Answer Clients questions relating or offers, contingencies, counter offers and notices Copyright REEC 2011 15 Page 28

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Minimum Level of Service Non Exclusive Contracts Contracts where the seller may be employing more than one broker then the minimum services levels are required. MLS contracts ( primarily “listing” contracts ) can only be exclusive contracts i.e. not….. “OPEN “. Copyright REEC 2011 16 Page 28 Not FYI

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Compensation Copyright REEC 2011 17 Page 29 Anything of Value Cash Gift Certificates Lottery Tickets Raffle Tickets A service A discount A Rebate What is Compensation

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Compensation Copyright REEC 2011 18 Page 29 FYI. “Compensation” doesn't create or determine an Agency Relationship i.e. even though two agents may eventually be paid ( selling and buyer agents), duties are owed by the selling or listing agent. Any Compensation to any one in a real estate transaction needs to be disclosed regardless of the amount. What is Compensation

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Compensation Copyright REEC 2011 19 Page 29 To Receive Compensation Licensed Employed Meet the terms of your agreement “ Procuring Cause” Contract on terms of parties All Compensation ( i.e. Sales Bonuses) come to an agent only through the sponsoring broker.

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Compensation Copyright REEC 2011 20 Page 29 and 30 If Agent has “Incorporated” themselves then broker can pay corporation if agent is the “sole shareholder”. Licensed sales assistant are also played by the sponsoring broker even if performing unlicensed activities. Can receive an additional rebate or incentive but only on their transaction. No referral fees paid to an Unlicensed person Agents

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Compensation Copyright REEC 2011 21 Page 30 Must be properly licensed and have a written Compensation agreement with managing ( sponsoring ) broker Can receive compensation ONLY form their sponsoring broker Can refer clients under CBA to but only with written disclosure to seller or buyer and no referral fee to agent Can not receive any referral from unaffiliated entities Lenders Title Companies Home inspectors Radon Mitigations Other real estate service providers.. Agents

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Confidentiality Copyright REEC 2011 22 Page s 30 and 31 Information that w as made confidential by request OR deals with their negotiating position OR Could harm the clients negotiating position if known. What Is Confidential Information

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Confidentiality Copyright REEC 2011 23 Page s 30 and 31 The Client permits by The disclosure is required by law The information becomes from other source than the agents When Is It No Longer Confidential Word of Conduct Public

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Confidentiality Responsibility Copyright REEC 2011 24 Page s 30 and 31 Companies A company must take steps to assure confidential information in it files ate no accessed by some ne who does not represent the client Must insure it stays even after the deal is over Managing Broker Is responsible for protecting any confidential information Material ( )Defects are never considered confidential and must be disclosed by the agents. Hidden After

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Copyright REEC 2011 25 Pages 32 and 36 Chapter 2 Quiz